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CEO incentive contracts in China: why does city location matter?

Bryson, Alex and Forth, John and Zhou, Minghai (2012) CEO incentive contracts in China: why does city location matter? NIESR discussion paper, Discussion paper 402. National Institute of Economic and Social Research, London, UK.

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Identification Number: Discussion paper 402

Abstract

CEO incentive contracts are commonplace in China but their incidence varies significantly across Chinese cities. We show that city and provincial policy experiments help explain this variance. We examine the role of two policy experiments: the use of Special Economic Zones (SEZs) to attract foreign direct investment (FDI), and the rate at which state owned enterprises (SOEs) were privatised. CEO incentive contracts are negatively correlated with foreign ownership and with the introduction of FDI via SEZs. However, the SEZ effect disappears having accounted for the city-level composition of firms and executives. Rapid SOE privatisation is associated with higher city and firm-level adoption of CEO incentive contracts, irrespective of the firm's own current ownership status. The positive effect of privatisation is robust to various estimation techniques and model specifications.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.niesr.ac.uk/index.html
Additional Information: © 2012 NIESR CEP
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 31 Jan 2013 17:03
Last Modified: 11 Jun 2014 10:10
URI: http://eprints.lse.ac.uk/id/eprint/48134

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